Share application money

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vijay kumar (Querist)
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28 December 2011 Dear Sir,

In the recent past, Many NRI holding companies are pumping funds to their indian subsidiaries(?) in the form of share application money.

These Indian companies are utilising these funds for making investments/ acquiring assets and/or for day to day business purpose.

Is share application money can be utilised for above said purposes? If so, under what sections of companies act/ fema?

Please explain?

Vishal D Shah

Vishal D Shah (Expert)
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31 December 2011 Dear any money towards capital can be used for any bonafide business purpose. Restrictions is on loan. Of course allotment of shares needs to happen within time limit else funds needs to be sent back.
Cavishalshah@gmail.com

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vijay kumar

vijay kumar (Querist)
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02 January 2012 Dear Vishal,

Thanks for the reply. Can you give me section wise details of FEMA or companies Act for your reply.

Thanks in advance.

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Vishal D Shah

Vishal D Shah (Expert)
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03 January 2012 You may refer Master Circular for Foreign Investment in India issued on 1.7.2011.

Further there is no sec mentioning any restriction on use of money coming in as capital.

For loan restriction check Master circular on ECB.

These are available on RBI website.

Regards, cavishalshah@gmail.com